ItInsightsWorld General: Singapore Locks In Saudi Aramco Oil Storage at Jurong Rock Caverns From Next Year
With energy flows across Asia exposed to disruptions caused by war in the Middle East, Singapore has reached an agreement with Saudi Aramco to place oil from Saudi Arabia in the Jurong Rock Caverns beginning next year, a move aimed at strengthening supply security in Southeast Asia.
What the agreement covers
The storage arrangement uses the Jurong Rock Caverns, an underground oil storage facility on an artificial island off Singapore's southern coast. The site can hold as much as 9 million barrels of oil.
Tan See Leng, Singapore's Energy Minister, said on Monday that the deal is intended to support energy supply across Southeast Asia and improve Singapore's resilience to global shocks. He stated: “We cannot predict every supply disruption, but we will always ensure Singapore is prepared. This will be our largest energy infrastructure expansion in decades.”
Broadening Singapore's supply defenses
- Beyond oil storage, Singapore will add five natural gas power plants within the next decade, raising generation capacity by 26%.
- The country is an Asian energy trading center and is therefore more exposed to global market turbulence, because 95% of its electricity is produced from imported natural gas.
- Indonesia is one of Singapore's largest natural gas suppliers; the events of last weekend exposed Singapore's energy supply vulnerability when Indonesia announced it would cut pipeline gas deliveries to Singapore by about 31 million cubic feet per day to meet domestic demand.
At the ruling People's Action Party annual conference on Sunday, Prime Minister Lawrence Wong said the government has invested in building liquefied natural gas import facilities and is seriously evaluating whether to include nuclear power in Singapore's energy mix.
Speaking about Indonesia's decision to cut gas exports, Wong said: “We hope all parties involved will honor their commitments, and Singapore's gas importers will take the necessary steps to protect their rights and interests under the relevant contracts.”
Riyadh's overseas storage strategy
Riyadh is advancing comparable arrangements with multiple foreign governments, and the oil storage agreement with Singapore is one example. These agreements are designed to allow Saudi Aramco to store oil in different overseas locations.
Since the outbreak of the U.S.-Iran war, the closure of the Strait of Hormuz and attacks on Saudi energy infrastructure have disrupted the kingdom's global oil supply routes. Saudi Arabia has been seeking ways to protect its global supply network.
| Element | Detail |
|---|---|
| Storage facility | Jurong Rock Caverns |
| Maximum storage | 9 million barrels of oil |
| Start timing | Next year |
| Power plant expansion | Five natural gas plants within the next decade |
| Capacity increase | 26% |
| Imported gas share for electricity | 95% |
Official view from Saudi Arabia
Saudi Energy Minister Prince Abdulaziz bin Salman said: “Positioning oil supplies closer to Asia, a key market, will increase the flexibility of our supply network, while also helping safeguard Singapore's energy supply security and strengthen its preparedness for contingencies.”
He added: “We believe there is potential for further expansion of cooperation between the two sides.”
The combined storage agreement, gas power expansion, liquefied natural gas import investment and nuclear review show Singapore building additional safeguards against supply disruption while Saudi Aramco seeks greater flexibility in serving Asian markets.